Why Can't Pertamina Absorb Banyu Urip Field’s Oil Production?

The Banyu Urip field potentially faces a production cut, as PT Pertamina has not absorbed its crude oil. Deputy for Finance and Monetization of the Upstream Oil and Gas Special Regulatory Taskforce (SKK Migas), Arief S. Handoko, said that if the oil stocks located in the Cepu Block were not sold, production might be cut. "Why can't it be sold? Because Pertamina has a lot of stock and demand for refineries is dropped due to COVID-19. There are also fewer flights," he said.

Apart from oil, Pertamina also imports fuel (BBM) products. With decreasing demand, it is difficult for the Oil and Gas BUMN Holding to absorb domestic oil from the Banyu Urip Field. However, he said, reducing production is not ideal because currently, the amount of domestic oil demand is twice the production in Indonesia. Moreover, the amount of oil imports is bigger than production capacity, so the option to reduce production is not relevant.

Therefore, Arief said, SKK Migas opened for the option to export oil from the Banyu Urip Field. "We have met with the Corruption Eradication Commission (KPK) for permission and asked for their opinion regarding export prices below the ICP [Indonesian crude price] and involvement of several parties to maintain compliance or issues that will come up in the future," he said.